Registration of a microfinance company under Section 8 is the most suitable option to start a finance business across India without RBI approval and capital restriction. Start with microfinance objects to help low-income households and reduce poverty.
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If you want to start a finance business in India without needing RBI approval or capital restrictions, a Section 8 microfinance company is the perfect solution — an organization focused on helping underprivileged communities reduce poverty through accessible microfinance.
These companies are exempt from acquiring an RBI license as per the master circular RBI/2015-16/15 DNBR (PD) CC.No.052/03.10.119/2015-16 dated July 01, 2015. Microfinance in India allows unsecured personal, group and household loans — in compliance with RBI norms.
Opting for this route offers several distinct advantages.
Profits are reinvested into the company's social objectives, ensuring ethical lending.
Exemption from income tax lets you maximize social impact.
Far less cumbersome regulation than other financial institutions.
Exempt from an RBI licence until asset size exceeds ₹100 crore.
Operate in line with RBI microfinance regulations.
Greater flexibility for entrepreneurs entering microfinance.
You file with the MCA and receive a Certificate of Incorporation. No RBI licence is required while you stay below the asset-size threshold.
Apply to the Ministry of Corporate Affairs.
Provide the required forms & proofs.
Company is legally incorporated.
Six clear stages — VakilKaro handles every filing end to end.
Start my registrationDigital Signature Certificate and Director Identification Number — essential for e-filing by all directors.
Submit Form INC-1 for a name that reflects your microfinance focus.
Critical documents outlining the company's social objectives.
Complete e-Form INC-32 with the MoA, AoA and supporting documents.
Registration necessary for tax compliance.
Open an account with a bank that understands Section 8 microfinance.
Everything needed to complete your registration.
Collateral-free microloans, governed by income and repayment rules.
If the family already pays ₹12,000/month in EMIs, no new loan is given until repayments fall back within the 50% limit.
Advantages under the RBI licence exemption (Section 45, RBI Act, 1934).
Registered under Section 8 with the ROC — a socially driven entity dedicated to community welfare.
Operate finance business without an RBI licence.
26% p.a. cap removed; rates must not be usurious.
Legal authority to sue defaulters and recover dues.
Annual filings with ROC & MCA — transparent & accountable.
Education, health, sanitation & environment initiatives too.
No area restrictions — serve communities across India.
Not bound by NBFC-MFI capital rules.
Lend collateral-free loans to underserved communities, improving accessibility for borrowers.
Commence your Section 8 microfinance company registration for just ₹1,20,000 — this fee covers all necessary registration costs.
Despite the MCA circular, our services guarantee a hassle-free registration. Our legal advisors specialise in navigating the complexities post the circular — ensuring the best deal for your microfinance company.
Every company gets a specific activity code inside its 21-digit CIN when it registers with the MCA.
All banks & NBFCs register here (earlier 65). Registering your microfinance object under 64 clearly identifies you as a finance company.
Companies doing social work register here. A Section 8 microfinance company (not-for-profit lending to reduce poverty) can use 88 with microfinance objects in the MOA.
Four bureaus generate credit information in India. Don't worry — excluding CIBIL, all others empanel you.
TransUnion CIBIL currently doesn't extend membership to Section 8 microfinance companies, but CRIF, Experian & Equifax provide membership to download customer data and update the list of defaulting loans.
Yes — with one important caution.
Registered under Section 8 for social objects, the company can receive donations — provided the full amount is spent on social activities other than loans.
Donations are for social purposes without a profit motive. Since microfinance charges interest on loans, funding lending from donations isn't a streamlined process — avoid it for core microfinance activity.
Like banks and NBFCs, recover EMIs automatically — saving time and agent costs.
of the loan amount, typically
Microfinance institutions can charge a processing fee to cover the cost of managing the loan. Borrowers should know about it upfront so there are no surprises. The exact amount can vary with local rules or the institution's policy.
Section 8 microfinance is the best option for a legal finance business with a valid licence — empowering underserved communities and aiding poverty alleviation across India. Ready to make a difference?